If you’re new to investing, a term you might hear thrown around a lot is “REIT”, which stands for Real Estate Investment Trust. These companies hold income-producing real estate, and are a source for regular income. That’s because REITS typically pay most or all of their taxable income out to shareholders, who pay the taxes instead.

REITs give individual investors an important method to invest in real estate that would otherwise not exist. Investors purchase stock in a company, which then re-invests that money through various business dealings. REITs essentially make it possible to own and in earn income from real estate without buying property.

REITs are also publicly traded on most major stock exchanges, which puts them within reach of the average person. However, there are two types of REITs to be aware of. Before you invest, consider which one fits your aims.

An equity REIT owns property long term, and hopes to get its income from tenants who rent from the REIT. A good example is an apartment complex or mobile housing unit. Mortgage REITs, on the other hand, invest in securities for both commercial and residential properties.

REITs are also a major driving force in the US economy. There are more than one million jobs in the US supported by REITs, and this method of investing has allowed for much of the infrastructure that makes the United States great. Industry, hospitals, apartments and affordable housing, shopping malls, offices and more are all possible thanks to individual investments in REITs.